The cryptocurrency was trading near $7,886 as of 3:04 p.m. ET, more than $600 lower than a day earlier, according to data from Coinbase. It's down more than 42 percent year to date after starting this year above $13,000.

"Today's news on Twitter's ban is likely a significant contributor to the steep sell-off," said Timothy Tam, co-founder of crypto-market intelligence platform CoinFi. "As new retail investors enter cryptocurrency, a large portion of them are trading on raw emotion."

Bitcoin's one-day performance

Source: CoinBase

Bitcoin prices fell earlier this year after news of similar announcements.

The digital currency dropped 12 percent in late January after Facebook, the world's second-largest online ad provider, said it would ban all ads that promote cryptocurrencies to prevent the spread of what it called "financial products and services frequently associated with misleading or deceptive promotional practices."

Google, the world's largest online ad provider, announced an update to its financial services policy earlier in March that will restrict advertising for "cryptocurrencies and related content" starting in June.

"Given that the larger and more significant platforms have already made this move, I wouldn't expect Twitter's news to have much of an effect," said Spencer Bogart, partner at Blockchain Capital.

"Jack Dorsey is clearly a big believer in crypto, so I would read between the lines on any announced 'ban'," he said.

Dorsey, who is also CEO Square, told the Sunday Times newspaper this week he thinks bitcoin will become the single global currency within the next decade, "but it could go faster."

Regulatory news has been another driver of price moves in 2018. Financial watchdogs have been vocal about potential risks in initial coin offerings, or digital coins released through fundraisers known as token sales.

The U.S. Securities and Exchange Commission stepped up efforts to police the fundraising process through scores of subpoenas reported earlier in March.

Bitcoin has dropped roughly 60 percent from its high near $20,000 in December, according to Coinbase. It began falling below $10,000 three weeks ago, after the Securities and Exchange Commission said it will require digital asset exchanges to register with the agency.

Prices recovered to the $9,000 range last week following a G-20 meeting where central bankers and finance ministers said they had "productive" discussions on cryptocurrency. Italy's central bank leader told reporters after the meeting that cryptocurrencies pose risks but should not be completely banned, according to Reuters. Still, bitcoin is down 24 percent in the past month, according to Coinbase.

Other cryptocurrencies, or "alt coins," have fallen double digits this year.

Bitcoin cash is down roughly 29 percent, ethereum has fallen 45 percent, while litecoin is 40 percent lower since January 1, according to Coinbase. Ripple has dropped more than 38 percent since the start of the year.